Created Date:
01 November 2019

Guernsey's fintech future…

Guernsey continues to thrive as a centre for financial services innovation, with the island’s businesses demonstrating their appetite not only to partner with global fintech giants, but also to develop their own pioneering technology.

Facilitation of smart contracts

Earlier this year, the States approved a draft Ordinance under The Electronic Transactions (Guernsey) Law, 2000, which is designed to create certainty in relation to the legal effect, validity or enforceability of contracts involving an electronic agent(s). This, in effect, facilitates the use of smart contracts in commercial transactions, whereby the contracts can be stored on either a public or a private blockchain and made visible to the participants of that blockchain. Smart contracts are essentially self-executing contacts with specific instructions written in their code, which are executed when certain conditions are met.

The new provisions enable contracts to be formed by the interaction of electronic agents without any human involvement, or by the interaction of an electronic agent and a natural person. This places Guernsey ahead of the pack in terms of providing a legal framework for the use of blockchain technology in commercial transactions, where the formation, execution, performance and termination of a contract cannot be denied legal effect solely because it involves electronic agents.

While the use of smart contracts is very much in its infancy, the use of virtual assets (including cryptocurrencies) is on the rise and this is unquestionably a positive step for Guernsey’s financial services businesses. From a legal perspective, Guernsey may also be in a position to lead the way in building a catalogue of judicial authorities and guidance, given the infrastructure now in place to facilitate such unique legal debate.

Crypto assets

While many in recent years have expressed cynicism regarding the purpose, security and stability of crypto assets, they are being much more broadly adopted as a means of transacting for value and are very much part of the future financial landscape. This has been recognised by a number of Guernsey businesses, including trust, fund and corporate services provider Zedra, which recently launched its end-to-end solution for the purchase and sale of crypto assets.  

The crypto asset end-to-end solution will see the buyer's fiat cash (e.g. EUR, GBP, USD) and seller's Bitcoin held to the order of Zedra and governed by an innovative tri-partite escrow agreement containing the transaction's terms. Following proof of funds, verification of the Bitcoin and satisfaction of the terms of the arrangement, the transaction will conclude and the Bitcoin is transferred to the buyer via ‘hot wallets’, or a cold storage custody platform. Carey Olsen advised Zedra on the legalities attached to the acquisition, custody and security of crypto assets to ensure the protection of both Zedra and its clients.

While Guernsey does not presently have any specific regulatory laws or guidance relating to any form of crypto assets or initial coin offerings (ICOs), the message emanating from Guernsey is positive, with the States and the Guernsey Financial Services Commission (GFSC) committed to encouraging innovation and adoption of emerging technologies where appropriate. Indeed, the GFSC has suggested that it will continue to consider the key controls around custody, liquidity, valuation of assets and protection of investors when assessing the suitability of an applicant for regulation.


As a firm, Carey Olsen advised the world’s largest cryptocurrency exchange, Binance, on the launch of its Jersey platform earlier this year. Binance Jersey provides secure and reliable Sterling and Euro to cryptocurrency (Bitcoin and Ethereum) exchange, enabling investors easy access to the rapidly evolving cryptocurrency market, and an alternative to standard currency (fiat) exchange.

The firm has also advised on some of the most innovative cryptocurrency funds, ICOs and other digital asset ventures. By providing tailored advice we can protect our clients' positions throughout the development and testing phases and foresee potential regulatory and compliance issues.

Looking ahead, the next 12 months are likely to see significant changes to both global technologies and the regulatory landscape. Provided pragmatic choices are made, without eliminating innovation, we can expect jurisdictions embracing the technology to attract a great deal of international business. In this regard, Guernsey is well placed to succeed as a fintech hub, setting an example in how to manage and deal with both tangible and digital assets.


An original version of this article was published in En Voyage, November 2019.

© Carey Olsen 2019.